I used the following instructions to setup Sieve with SquirrelMail working hand in hand with Snow Leopard Server.

Robert’s Blog: Using SquirrelMail or RoundCube server side rules on Snow Leopard Server.

Using SquirrelMail or RoundCube server side rules on Snow Leopard Server

Apple Snow Leopard Server comes with a very limited Mail Sieve rule management within the wiki application.

If you are disappointed by Snow Leopard Servers cappabilities to manage sieve rules (Server Side Mail Rules), there are solutions available.

Prerequisites
Enable Server Side Rules in Mail Server
Start Server Admin
Mail > Settings > Advanced: Tick “PLAIN” on IMAP/POP and save it
Mail > Settings > Filters: Tick “Enable Server Side mail rules”, save it and restart the mail service.

Squirrelmail
SquirrelMail is the default webmailer in SLS. You can use the plugin avelsieve to manage server side mail rules. Download avelsieve (I recommend version 1.9.9) and unpack in directory /usr/share/squirrelmail/plugins (so that directory avelsieve is within the plugins dir).
Note that you also need to download javascript_libs plugin, if you use a recent version (>=1.9.8) of avelsieve.
If you need the javascript_libs plugin, also unpack it in squirrelmail’s plugins dir.

Then edit the file plugins/avelsieve/config/config.php (copy config_sample.php to config.php if not exisiting).
Change the authentication mechanism to:
$sieve_preferred_sasl_mech = ‘PLAIN’;

Edit file /usr/share/squirrelmail/config/config.php and register the plugin(s):
$plugins[0] = ‘avelsieve’;
$plugins[1] = ‘javascript_libs’; // only if using a newer version of avelsieve. See avelsieve page

Access the Webmailer (http://<SLS_server_name>/webmail/ and check the filter connection.